Friday, October 28, 2011

Charting Two Months of Housing Woahs...

Starting in late August there was this news report:

Sales of new homes fell for the third straight month in July, a sign that housing remains a drag on the economy. If the current pace continues, 2011 would be the worst year for new-home sales on records dating back at least half a century.

Sales fell nearly 1 percent in July to a seasonally adjusted annual rate of 298,000, the Commerce Department said Tuesday. That's less than half the 700,000 that economists say represent a healthy market.

Last year, 323,000 homes were sold — the worst year on records that go back to 1963.

While new homes represent less than one-fifth of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs and $90,000 in taxes, according to the National Association of Home Builders.

High unemployment, larger required down payments and tougher lending standards are preventing many people from buying homes.

The following day, this report came out about mortgage apps:

Home mortgage applications for purchases fell to a nearly 15-year low last week as resurgent worries about the strength of the economy kept buyers at bay, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 2.4 percent in the week ended August 19.

The seasonally adjusted gauge of loan requests for home purchases tumbled 5.7 percent to its lowest level since December 1996, the MBA said. Refinance demand also sagged as interest rates rose, with the refinance index slipping 1.7 percent.

Mortgage rates then did this the day after that:

Fixed mortgage rates edged up this week from their lowest levels in decades. But few have been able to capitalize on them.

The average rate on the 30-year fixed mortgage rose to 4.22 percent, Freddie Mac said Thursday. That's up from 4.15 percent last week, the lowest level on records dating to 1971.

The average rate on the 15-year fixed mortgage, a popular refinancing option, rose to 3.44 percent. Last week it fell to 3.36 percent.

At that point in time, the local area had this report:

About half of all residential real estate sales in Ventura County this spring involved properties in some stage of foreclosure, according to data released Thursday by RealtyTrac Inc.

RealtyTrac, a foreclosure listing service, said 50.1 percent of the 1,349 Ventura County home sales in the second quarter were foreclosure-related, with an average price discount of 24.7 percent. Nationally, only 31.3 percent of sales involved foreclosure-related properties, but the price discount was larger — 32.1 percent.

When September rolled around, this news came in:

Builders broke ground on fewer homes in August, a reminder that the housing market remains depressed.

The Commerce Department said Tuesday that builders began work on a seasonally adjusted 571,000 homes last month, a 5 percent decline from July. That's less than half the 1.2 million that economists say is consistent with healthy housing markets.

Single-family homes, which represent roughly two-thirds of home construction, fell 1.4 percent. Apartment building plunged 12.4 percent. Building permits, a gauge of future construction, rose 3.2 percent.

Hurricane Irene also slowed construction in the Northeast.

Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Last year was not much better.

...depressed consumer and business sentiment is holding back recovery. The Conference Board, an industry group, said its index of consumer attitudes was little changed at 45.4 this month from 45.2 in August. Economists had expected a rise to 46.0.

"Consumers appear to have lost some hope in this recovery and may cause them to retrench spending, which could augur poorly for the recovery," said Millan Mulraine, a senior macro strategist at TD Securities in New York.

Details of the confidence report were mixed. More Americans plan to buy houses over the next six months, but fewer intend to purchase cars and other big-ticket items.

The steep stock market sell-off, political bickering in Washington over budget policy and the worsening debt crisis in Europe all have eroded confidence, viewed as a key gauge of consumer health.

Consumer spending data on Friday will shed more light whether the decline in equities -- with the Standard & Poor's 500 index down 13 percent since late July -- caused households to hunker down. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, slowed sharply in the second quarter.

Sales and prices of new single-family U.S. homes fell in August despite historically low mortgage rates, underscoring the difficulties policymakers face in efforts to boost the moribund housing sector.

A stagnant job market and a big overhang of unsold existing homes have combined to keep new home sales on the rocks even as mortgage rates returned to lows not seen since at least the early 1970s.

New home sales slipped 2.3 percent last month to a 295,000 annual rate, a six-month low, the Commerce Department said on Monday. That was in line with analysts' forecasts and did little to allay fears the United States could slip back into recession.

The median sales price also moved lower from the previous month and was 7.7 percent below year-ago levels.

Fixed mortgage rates have fallen to historic new lows for a fourth straight week and are likely to fall further.

The average on a 30-year fixed mortgage fell to 4.01 percent from 4.09 percent this week, Freddie Mac said Thursday. That's the lowest rate since the mortgage buyer began keeping records in 1971. The last time long-term rates were lower was in 1951, when most long-term home loans lasted just 20 or 25 years.

The average on a 15-year fixed mortgage, a popular refinancing option, ticked down to 3.28 percent. Economists say that's the lowest rate ever for the loan.

Then they did this!!!:

Mortgage rates have never been cheaper, with the 30-year rate falling below 4% for the first time in history.

The interest rate on a 30-year fixed-rate loan fell to 3.94% this week, the lowest rate since mortgage giant Freddie Mac began tracking it. Meanwhile, the average for a 15-year fixed-rate mortgage also hit a record, falling to 3.26%.

It then fluctuated and went to this:

The average rate on the 30-year fixed mortgage was nearly unchanged for a second straight week after rising from a record low.

Freddie Mac said Thursday that the rate on the 30-year loan fell to 4.10 percent from 4.11 percent last week. Three weeks ago, it dropped to 3.94 percent. The National Bureau of Economic Research says that's the lowest rate ever.

The average rate on the 15-year fixed mortgage was unchanged at 3.38 percent. Three weeks ago, it hit a record low of 3.26 percent.

Low rates have done little to jolt the struggling housing market. Sales remain depressed, and home prices are still dropping in many markets.

High unemployment and declining wages have made it harder for many people to qualify for loans. Most of those who can afford to refinance already have.

The number of Americans who bought previously occupied homes fell in September and is on pace to match last year's dismal figures — the worst in 13 years.

Today's record-low mortgage rates are out of reach for millions of U.S. homeowners who would benefit from them most.

One in four homeowners with a mortgage — 11 million people — owe more than their home is worth. These "underwater" borrowers have virtually no shot at refinancing.

Their plight is a drag on the housing market and the broader economy.

The Obama administration is hoping at least 1 million of these borrowers will take advantage of its refinancing program under more lenient rules unveiled Monday. Homeowners who are current on their payments will be eligible to refinance no matter how much their home's value has dropped.

Still, it's unclear how many borrowers will benefit. Lenders will remain under no obligation to refinance a mortgage they hold.

A growing number of these people are missing mortgage payments and falling into foreclosure. And the higher rates they're locked into limit how much they can contribute to a weak economy. If they were able to refinance at today's rates, it could boost consumer spending by tens of billions of dollars, economists say.

Underwater homeowners are paying an average 30-year fixed mortgage rate of 5.7 percent, according to an analysis of mortgage data by CoreLogic and The Associated Press. That compares with today's average rate of 4.11 percent on a 30-year fixed mortgage. For a homeowner with a $250,000 mortgage, the lower rate would save more than $200 a month.

The One announced a new program to "help" those in the mortgage/housing crunch.

Via Hot Air, here's some analysis of this "wonderful" program by The One:

This plan is for current borrowers who want to get a lower monthly payment through a lower mortgage rate. Yes, it’s the first plan that “rewards positive behavior,” says Florida attorney and mortgage expert Shari Olefson, but it doesn’t do anything for the now 6 million plus borrowers who are either behind on their mortgage payments or already in the foreclosure process. It also does nothing about all those foreclosed properties sitting on the books of Fannie, Freddie, the FHA and the big banks that still need to be sold and right now can only be sold at below-market prices. This plan does nothing to stop the bleeding in home prices.

Another analysis here.

Tuesday, October 25, 2011

Economy 101...

How the economy entered a recession again at the end of August:

“Since 1948, every time the four-quarter change has fallen below 2 percent, the economy has entered a recession. It’s hard to argue against an indicator with such a long history of accuracy.”

Everybody, let's do the "twist":

The Federal Reserve said Wednesday it will shuffle $400 billion of its portfolio to try to drive down long-term interest rates and get the economy going. But economists doubted it would do much good, the stock market sold off, and the Fed itself was unusually divided over the strategy.

Lowering interest rates makes it cheaper for people and companies to borrow money and spend it throughout the economy, which has slowed sharply more than two years after the Great Recession. Consumer spending makes up most of the nation's economic activity.

But rates are already at historic lows. Americans, still feeling insecure about the future, might not be willing to take on more debt, even at lower rates. Others see no reason to jump into the housing market when prices are still falling. Others can't get credit.

"Frankly, I don't see it having any meaningful impact on the economy," said Bernard Baumohl, chief global economist with the Economic Outlook Group. "What the Fed did today was a distraction."

Come on, baby... let's do the "twist" (a mixed impact for consumers).

...and it goes like this ("Twist" Q&A).

The U.S. economy is on a "knife edge" between growth and contraction, and if it were a dashboard, it would be flashing "watch out, danger ahead on all gauges," Dallas Federal Reserve Bank's top economist said on Tuesday.

"The economy is moving along at stall speed," Dallas Fed research director Harvey Rosenblum told a forum sponsored by the greater San Antonio Chamber of Commerce. "Unless we start moving a little bit faster, we are at a tipping point where things may not go the right way."

The U.S. jobs engine has lost momentum and could be set for further "backtracking," Meanwhile, he said, there is also a "credible" risk of rising inflation.

"We are in the midst of the Second Great Contraction," Rosenblum said, demonstrating the economy's predicament with a picture of a place on the Appalachian Trail known as "Knife's Edge."

"This patient is still not ready to get out of the hospital, there are still tubes connected to the patient, and the patient is still not responding well to all the medicine."

The grim assessment of the economic outlook came a week after a majority of the Fed's policy-setting panel backed further monetary policy easing to help support a faltering U.S. recovery.

VP Joe Biden puts the blame of the economy square on The One and his administration. Thanks, Joe!!!

Senator Dick Dubin (D) blames fellow democrats for not passing The One's so-called "Jobs" bill (really just another bogus "stimulus" package).

And it's possible that the U.S.'s credit rating may soon get knocked down a peg again - this time by Moody's and/or Fitch. (This was already done by S&P in August.)

Consumers' confidence in August dropped almost 15 points to the lowest level since April 2009 as worries about the economy fueled the wildest stock market swings since the financial meltdown in 2008.

At a time when Americans are increasingly worried about a weak job market, higher costs for food and clothing and recent stock market turmoil, the falling confidence numbers raise new concerns about their willingness to spend and jumpstart the economy. That's particularly important since consumer spending accounts for 70 percent of U.S. economic activity.

"Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook," said Lynn Franco, director of The Conference Board Consumer Research Center in a statement.

The Conference Board said Tuesday that its Consumer Confidence Index fell to 44.5, down from a revised 59.2 in July. The number was the lowest level since April 2009 when the reading was 40.8. It also is far below the 53.3 that analysts had expected. A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth.

Americans say they feel worse about the economy than they have since the depths of the Great Recession.

Consumer confidence fell in October to the lowest since March 2009, a research group said Tuesday — an ominous sign for the economy as families begin to prepare their budgets for holiday shopping season.

The declining mood reflects the big hit that the stock market took in late summer — down almost 20 percent in one month — as well as frustration with an economic recovery that doesn't really feel like one.

The Conference Board, a private research group, said its index of consumer sentiment came in at 39.8, down about six points from September and seven shy of what economists were expecting.

The reading is still well above where the index stood two and a half years ago, at 26.9. But it's not even within shouting distance of 90, what it takes to signal that the economy is on solid footing.


Tuesday, October 18, 2011

Where the heck am I? LOL

I'm here. Been busy with life. Will update soon.

I have been tracking news stories and links, and will be posting in the coming days.


Monday, October 03, 2011

Markets Down to 13-month Low...

Two months of gains from the previous lows of the year have now been wiped out.

Dow closed at 10655, Nasdaq closed at 2335, S&P closed at 1099.

News link here.

Summary here: